Community Banks Waking Up to the Potential of Small Business Lending Opportunities

New study finds 56% of community bankers cited small business loans as a high priority in 2022

CHICAGO--()--Community banks stand to benefit from both a competitive and profitability standpoint should they decide to shift their lending strategies to focus more on small-and-medium-sized businesses, according to new research commissioned by banking technology provider Amount and produced by Cornerstone Advisors.

The study, titled Small Business, Big Ambitions: How Community Banks Can Embrace the Small Business Market, found that while community banks in recent years have shifted some priorities to SMB lending, they continue to lose ground to specialized fintechs and major financial institutions. The firm also noted how 2020’s Paycheck Protection Program (PPP) did not have a long-lasting impact on small business lending. While PPP increased the Small Business Administration lender pool from 1,300 to more than 4,700 banks and credit unions, fewer than 600 institutions have made small business lending a priority.

Amount sponsored the report to understand how financial institutions are prioritizing SMB lending, where they are investing resources in people and technology to target this segment, and what institutions can do to eliminate the friction involved with identity verification to decrease new account abandonment and increase funding.

“Community banks have an incredible opportunity in front of them to reach new small business customers, and protect their standing and reputations in the communities they serve,” said Amount CEO Adam Hughes. “What remains to be seen is which of these banks will be willing to make the investments in their people, products, and technology to keep pace with fintechs and larger financial institutions that have stepped up to fill the gap in recent years.”

“Banks are increasingly concerned about the decline in commercial real estate office renewals and the slowing of mortgage volume coupled with the increase in interest rates,” said the author of the report, Cornerstone Advisors Senior Director John Meyer. “To compensate for the potential loss of business, loans of less than $1.5 million to small-to-medium sized business become attractive to banks—but only if they streamline the lending process and eliminate the expensive underwriting steps associated with those loans.”

The report draws on a survey of 260 financial institutions fielded by Cornerstone Advisors in Q3 2021 to understand their 2022 priorities. The report also draws on a Q4 2020 survey of senior executives at 75 mid-size banks and credit unions conducted by Cornerstone Advisors. The average asset size of responding institutions is $3.4 billion, with nearly half (47%) of the respondents in the $1 billion to $10 billion range.

In addition, Cornerstone Advisors surveyed 1,265 small business owners on their desires from their banking relationships. Cornerstone Advisors also conducted interviews with senior executives of 12 large (>$1 billion) institutions to gain a deeper perspective on the small-to-medium business lending challenges.

Some of the key findings from the report include:

  • 56% of bankers cited small business loans as a high priority, virtually equal to the percentage listing commercial and industrial (C&I) loans as a priority.
  • 62% of small business owners surveyed planned to borrow an average of $2 million over the next two years.

About Amount

Amount helps financial institutions make banking simpler, safer and more convenient with a full suite of end-to-end omnichannel consumer, small business and POS financing solutions. Developed by lending industry experts, Amount’s fully integrated and flexible platform is underpinned by enterprise bank-grade infrastructure and compliance, enabling banks to securely power new and differentiated offerings within months — not years. With Amount, banks can optimize performance across product categories while tapping into various service offerings including customer acquisition, funnel and performance assessments, and risk analytics. Amount clients include financial institutions collectively managing just over $3.1T in US assets and servicing more than 50 million U.S. customers. Visit for more information.

About Cornerstone Advisors

Cornerstone Advisors, a management and technology consulting firm, brings innovative insights and strategic execution to banks, credit unions, and fintechs, helping them reach the next level of performance.


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